Google Inc (GOOG): YouTube confirms music subscription service, indie music videos may be taken down

YouTube, the popular video website owned by Google Inc (NASDAQ:GOOG), has confirmed that it is close to launching a new music subscription service. Unfortunately for YouTube users, some of the videos run by indie labels will be taken down due to a dispute over payments. Some of the artists that are signed by indie labels include Vampire Weekend, Adele, and Arctic Monkeys.
The indie videos account for up to 10% of all the music for which YouTube has rights to feature. But they will likely be pulled down since YouTube has been unable to reach an agreement with the leading indie labels. YouTube and the labels are unable to agree on royalty terms of the subscription service in addition to the existing terms with its free service.

YouTube execs argue that they cannot offer music on the free service without also being available on the paid service since it would disappoint subscribers. So YouTube will take down songs that cannot be available on both services.

“We’re adding subscription-based features for music on YouTube to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year,” stated a YouTube spokesman.

YouTube is testing the new service internally. The dispute with the indie labels is not likely to hold up the plans for the launch.

Rich Bengloff, president of the independent label trade association A2IM, said in an interview with Billboard that indie labels are treated “equitably and fairly” by Spotify, Rdio, Rhapsody, and around 20 services, but not YouTube. “I filed a complaint with the FTC last week,” said Bengloff.